1098T, 86% Scholarship, Box 5 greater than Box 1, Paid 7K OOP, How do I enter/report?

[Tennisfam]

My son (a dependant) on my tax return is subject to the following scenario on his 1098T, below are actual numbers and I can tie them out, I do not know how to enter this into Turbo Tax. 

My sons scholarship is 86%, I paid 14%. His scholarship is a blanket % applied across the board to all fees, tuition, room & board as agreed on his signed financial aid offer.  I believe I do not have to pay tax on the entire difference between Box 1 and Box 5 when I have paid approx 7K out of pocket that applies across the board as well. Therefore, some of my out of pocket applies to Qualified expenses when I allocate the scholarship across all categories of expenses & fees. 

Please explain if I am correct/incorrect and how I would go about entering this information into Turbo Tax.

Thank you so much!

Jeanne

			Allocation	Amount
	Total Cost	Scholarship	of Scholarship	Paid by Us
Qual Exp. Box 1	$          33,807.54	86.02%	$      29,081.13	$         4,726.41
Non Qual Fees	$                595.67	86.02%	$            512.39	$               83.28
Room & Board	$          16,624.67	86.02%	$      14,300.48	$         2,324.19
Totals	$          51,027.88	Box 5	$      43,894.01	$         7,133.87

[Hal_Al · Accepted solution]

Your numbers are straight forward (most people don't have it that clear).  You have $4726 in qualified expenses for the tuition credit and your student has to report $14,812 (14,300 + 512) of taxable scholarship on his return.

The easiest may to enter it is use the 1098-T screen to enter your actual amounts. On your return, enter $4726 in box 1 and 0 in box 5.  On his return, enter $14,812 in box 5 and 0 in box 1. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.

 The 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income. 

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. 

[Tennisfam]

Thank you so much! I really appreciate it...this is such a BIG help. 

All the best!

Jeanne